Home Loans till Rs 35 Lakhs Might Become Cheaper in Metropolitan Areas
Jun 11, 2018 Home Loan
The Reserve Bank of India (RBI) has hiked the repo rates by 25 basis points indicating tightening in the interest rates, that could result in making all loans including home loans also more costlier. But the apex body has revised the limits for housing loan for priority sector lending (PSL) from existing Rs 28 lakh to Rs 35 lakh which might reduce the interest for home loans up to 35 lakhs.
In order to boost the low-cost housing for the Economically Weaker Sections and Lower Income Groups, RBI in its policy decision, has revised the housing loan limits from existing Rs 28 lakh to Rs 35 lakh in metros and from existing Rs 20 lakh to Rs 25 lakh in other areas, provided the overall cost of a residential unit in metros and other areas do not go beyond Rs 45 lakh and Rs 30 lakh, respectively.
Experts are in a view that RBI’s decision to increase the limit would be a huge boost for the first time homebuyers in the affordable segment. And they are also eligible of getting subsidy benefits of Rs 2.68 lakh under schemes like Pradhan Mantri Awas Yojna from the central government.
Banks lend around 40 per cent of its total loan to the priority sectors such as borrowers from weaker sections, micro enterprises and agriculture sectors to name a few where default rates are high and banks tend to lend to those sectors where the default rates are low. Housing loans ranging from Rs 10 lakh to Rs 35 lakh have comparatively low default rates. Hence, banking experts say that the RBI’s decision would prompt banks to decrease rates on small ticket home loan segment in order to increase market share.
Experts further suggest that the decision of hike in repo rates by 25 basis points might suppress the growth of the real estate sector which was seen to be flexible in the past few months. Experts feel that the Indian realty sector right now requires lower rates to provide a further boost to the 'Housing for all by 2022' mission that would enable the realty sector to lead the growth of the Indian economy.
However, some experts are also in view that the 25 basis point hike would not make much difference to the real estate sector but everyone would prefer rates to come down.
In order to boost the low-cost housing for the Economically Weaker Sections and Lower Income Groups, RBI in its policy decision, has revised the housing loan limits from existing Rs 28 lakh to Rs 35 lakh in metros and from existing Rs 20 lakh to Rs 25 lakh in other areas, provided the overall cost of a residential unit in metros and other areas do not go beyond Rs 45 lakh and Rs 30 lakh, respectively.
Experts are in a view that RBI’s decision to increase the limit would be a huge boost for the first time homebuyers in the affordable segment. And they are also eligible of getting subsidy benefits of Rs 2.68 lakh under schemes like Pradhan Mantri Awas Yojna from the central government.
Banks lend around 40 per cent of its total loan to the priority sectors such as borrowers from weaker sections, micro enterprises and agriculture sectors to name a few where default rates are high and banks tend to lend to those sectors where the default rates are low. Housing loans ranging from Rs 10 lakh to Rs 35 lakh have comparatively low default rates. Hence, banking experts say that the RBI’s decision would prompt banks to decrease rates on small ticket home loan segment in order to increase market share.
Experts further suggest that the decision of hike in repo rates by 25 basis points might suppress the growth of the real estate sector which was seen to be flexible in the past few months. Experts feel that the Indian realty sector right now requires lower rates to provide a further boost to the 'Housing for all by 2022' mission that would enable the realty sector to lead the growth of the Indian economy.
However, some experts are also in view that the 25 basis point hike would not make much difference to the real estate sector but everyone would prefer rates to come down.
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